The WACC of Goldgroup Mining Inc (GGA.TO) is 5.3%.
| Range | Selected | |
| Cost of equity | 4.80% - 10.00% | 7.40% |
| Tax rate | 6.50% - 10.50% | 8.50% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 4.7% - 6.0% | 5.3% |
| Category | Low | High |
| Long-term bond rate | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | -0.2 | 0.52 |
| Additional risk adjustments | 2.5% | 3.0% |
| Cost of equity | 4.80% | 10.00% |
| Tax rate | 6.50% | 10.50% |
| Debt/Equity ratio | 2.61 | 2.61 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 4.7% | 6.0% |
| Selected WACC | 5.3% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for GGA.TO:
cost_of_equity (7.40%) = risk_free_rate (3.55%) + equity_risk_premium (5.60%) * adjusted_beta (-0.2) + risk_adjustments (2.75%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.